Results for the First Quarter 2003...Results for the First Half 2009 Fixed Net line loss cut by 2/3 in 1H 09 to 20,600 lines Double digit subscriber growth of 10.1% to 18.1 million

Results for the First Half 2009

Fixed Net line loss cut by 2/3 in 1H 09 to 20,600 lines

Double digit subscriber growth of 10.1% to 18.1 million customers in Mobile Communication

Revenues decline by 5.8% to EUR 2,388.8 million primarily driven by lower Fixed Net revenues

EBITDA decreases by 5.2% to EUR 904.8 million while operating costs decline by 6.7%

Operating free cash flow grows by 5.9% while free cash flow per share increases by 2.4% to 0.75 EUR

Outlook for 2009 on a constant currency basis fully reiterated, as announced on the occasion of the 1Q 09 results

Dividend per share floor of 75 cent per share reiterated for 2009–2012

Management Board has resolved to cancel 17 million treasury shares or 3.7% of share capital as of August 24, 2009, thus, the number of shares will be reduced to 443 million

Share buyback envisaged for 2010, subject to stable conditions

All financial figures are based on IFRS; if not stated otherwise, all comparisons are given year-on-year. EBITDA is defined as net income excluding interest, income tax expense, depreciation and amortization, impairment charges, equity in earnings of affiliates, income/loss from investments and foreign exchange differences. This equals operating income before depreciation, amortization and impairment charges.

in EUR million 2Q 09 2Q 08 % change 1H 09 1H 08 % change

Revenues 1,191.7 1,276.2 -6.6% 2,388.8 2,535.8 -5.8%

EBITDA 450.0 468.5 -3.9% 904.8 954.2 -5.2%

Operating income 170.2 174.1 -2.2% 350.3 376.4 -6.9%

Net income 82.3 96.3 -14.5% 167.6 226.0 -25.8%

Earnings per share (in EUR) 0.19 0.22 -14.5% 0.38 0.51 -25.8%

Free cash flow per share (in EUR) 0.45 0.40 12.1% 0.75 0.73 2.4%

Capital expenditures 149.3 190.7 -21.7% 265.3 350.3 -24.3%

in EUR million June 30, 09 Dec. 31, 08 % change

Net debt 4,003.9 3,993.3 0.3%

Net debt/EBITDA (12 months) excluding restructuring program 2.1x 2.1x

Group Review

Vienna, August 19, 2009 - Telekom Austria Group (VSE: TKA, OTC US: TKAGY) today announced

its results for the first half 2009 and the second quarter ending June 30, 2009. The presentation for the conference call and the key figures of the Telekom Aus-tria Group in excel format („Key Figures

2Q 2009“) are available on our website at www.telekomaustria.com

Results for the first nine months 2009

will be announced on November 12, 2009.

Contacts: Investor Relations

Peter E. Zydek Head of Investor Relations Tel: +43 (0) 59059 1 19001

E-Mail: [email protected]

Corporate Communications Elisabeth Mattes

Press-Spokeswoman Tel: +43 (0) 664 331 2730

E-Mail: [email protected]

Summary

Year-to-date comparison:

In the first half of 2009 revenues decreased by 5.8% to EUR 2,388.8 million primarily due to lower

revenues in the Fixed Net segment resulting from lower wholesale revenues and voice volumes as

well as the sale of the Fixed Net subsidiaries in the Czech Republic, in Slovakia and in Poland re-

spectively. While total operating expenses were reduced by 6.7%, EBITDA declined by 5.2% to

EUR 904.8 million due to lower contributions from both business segments. Operating income fell

by 6.9% to EUR 350.3 million, with a higher contribution from the Fixed Net segment partly com-

pensating for a lower operating income in the Mobile Communication segment. Net income was

EUR 167.6 million in the first six months of 2009 compared to EUR 226.0 million in the same pe-

riod of the previous year.

Total capital expenditures decreased from EUR 350.3 million to EUR 265.3 million driven by a

reduction of capital expenditures in both segments due to postponements and restrictive invest-

ment policy. Operating free cash flow grew by 5.9%, while free cash flow per share increased by

2.4% to EUR 0.75. Net debt remained almost stable at EUR 4,003.9 million at the end of June

2009 compared to year-end 2008. Net debt to EBITDA (last 12 months) excluding the impact of

the provision in 4Q 2008 for the restructuring program was 2.1x.

Operating free cash flow grew by 5.9%

Quarterly comparison:

In 2Q 09 revenues declined by 6.6% to EUR 1,191.7 million and EBITDA decreased by 3.9% to

EUR 450.0 million. These declines were driven primarily by the Fixed Net segment with almost

stable contributions from the Mobile Communication segment. Reductions in operating expenses

resulted in a higher profitability of the Fixed Net segment despite lower revenues. Both the domes-

tic mobile business and the operation in Belarus reported EBITDA growth rates, while start-up

operations in the Republic of Serbia and the Republic of Macedonia further reduced their EBITDA

losses. EBITDA trends for the operations in Bulgaria, Croatia and Slovenia improved as rates of

decline slowed down compared to 1Q 09. Operating income decreased by 2.2% to EUR 170.2 mil-

lion as a higher contribution from the Fixed Net segment partly offset a lower operating income in

the Mobile Communication segment. Net income decreased by 14.5% to EUR 82.3 million in 2Q 09

compared to EUR 96.3 million in 2Q 08.

Rates of EBITDA decline in Eastern operations slowed down compared to

1Q 09

A restrictive investment policy and postponements of investments supported a reduction of capi-

tal expenditures from EUR 190.7 million to EUR 149.3 million which allowed an increase of free

cash flow per share by 12.1% to EUR 0.45 in 2Q 09. Operating free cash flow increased by 8.2%.

Market Environment

While the sustained migration of Fixed Net voice customers to the Mobile Communication segment

has been the main challenge for several years, mobile broadband continues to make steady inroads

into the market for internet access. However, following the introduction of attractive product

bundles, line loss decelerated significantly during recent quarters. Against this background the

Fixed Net segment continues to focus on the stabilization of cash flows by means of a market-

oriented product portfolio and attractive pricing schemes as well as a comprehensive cost-cutting

program.

The Mobile Communication segment continued to show subscriber growth both in Austria and in its

international markets. Austria is regarded as a highly developed mobile communications market

Telekom Austria Group: Results for the First Half 2009 1

http://www.telekomaustria.com/

mailto:[email protected]

mailto:[email protected]

characterized by fierce competition. Bulgaria, Croatia and Slovenia still offer untapped potential in

terms of contract customers and innovative data products, however, fierce competition and the

economic slowdown in these markets led to price cuts and declining ARPUs. The impact of the

economic crisis in the consumer segment of our Eastern and South-Eastern operations in Bulgaria,

Croatia, Slovenia and Belarus is limited. The impact is predominantly apparent in the business

segment.

Velcom in Belarus was impacted by continuing devaluation of the Belarusian Ruble. Since the be-

ginning of the year the Belarusian Ruble has devaluated by 29.3% against the Euro. The counter-

measures adopted to mitigate the negative impact include a tariff increase effective as of mid-

February 2009 as well as a rebalancing of costs based on the local currency. A segment-wide risk

monitoring system has been put in place to identify risk factors such as currency fluctuations or

long-term macro-economic trends in order to react in due time. Regulation remains an important

external disrupting factor in all markets primarily impacting roaming tariffs and termination

charges.

Update on Share Buyback Program

As announced at the Capital Market Day in January 2009, Telekom Austria Group evaluated the

potential for a share buyback. Although financial markets make financing available, the operating

performance in South- and Eastern Europe is subject to uncertainties and the risk of currency

devaluations still remains. Nevertheless, the Telekom Austria Group envisages in accordance with

the capital allocation policy to start share buybacks in 2010 depending on the normalization of

business, stable currencies and provided no investment with a higher return is available. About 1/3

of free cash flow after dividends is available for a potential share buyback. The rest remains as a

reserve.

Outlook 2009 Reiterated

As announced in May 2009 and based on a constant currency assumption, the Telekom Austria

Group anticipates slightly weaker revenues than originally expected for the year 2009 due to

lower Fixed Net wholesale revenues as well as lower Mobile Communication interconnection and

equipment revenues, which will be accompanied by a proportionate reduction in costs. Therefore,

on a constant currency basis EBITDA guidance remains unchanged at about EUR 1.9 billion in

2009. Capital expenditures for the year 2009 are expected to amount to approximately EUR 800

million, which will result into an operating free cash flow (EBITDA less capital expenditures) of

around EUR 1.1 billion. The Telekom Austria Group expects to distribute 65% of net income in form

of dividends at a minimum floor of 75 cent per share.

Outlook 09as of August 19

Outlook 09 as of May 13

Outlook 09 as of Feb. 25

Outlook 09 as of Jan. 29

Telekom Austria Group

Revenues Slightly weaker than

originally expected Slightly weaker than

originally expected ~ EUR 5.1 bn ~ EUR 5.1 bn

EBITDA ~ EUR 1.9 bn ~ EUR 1.9 bn ~ EUR 1.9 bn ~ EUR 1.9 bn Capital expenditures ~ EUR 0.8 bn ~ EUR 0.8 bn ~ EUR 0.8 bn ~ EUR 0.8 bn Operating Free Cash Flow ~ EUR 1.1 bn ~ EUR 1.1 bn ~ EUR 1.1 bn ~ EUR 1.1 bn

Dividend

65% of net income, DPS of 75 cent

minimum


minimum


minimum


minimum

Outlook based on constant currency basis as announced on the Capital Market Day in January 2009

2 Telekom Austria Group: Results for the First Half 2009

Reporting Changes

FX gains & losses moved from EBITDA to financial result

Starting from 1Q 2009 foreign exchange gains and losses are reported as part of the financial

result instead of being split between operating and financial income. Comparative figures for 2Q

2008 and the first six months of 2008 were adjusted accordingly by a total FX gain of EUR 0.6

million and of EUR 13.5 million respectively.

Revenue breakdown in Fixed Net & Mobile Communication condensed to

reflect changes in business

The revenue breakdown in both segments, Fixed Net and Mobile Communication, has been con-

densed beginning with 1Q 09 to reflect changes in the product portfolio. This adjustment affects

the revenue split but has no further effects on total segment revenues.

Segment revenues remain un-changed

In the Fixed Net segment previously reported revenues from ‘Fixed Net Voice Traffic’, ‘Switched

Voice Monthly’ and ‘Internet Access & Media’ as well as some smaller reclassifications in 2Q 08 in

the amount of EUR 8.3 million from ‘Data & IT Solutions’ and EUR 11.4 million from ‘Other’ reve-

nues were condensed and included in ‘Access, Voice & Broadband’ to reflect the marketing of

product bundles encompassing access, voice, Internet and IPTV. This revenue position equals

average revenues per Fixed Net access line (ARPL) multiplied by the average number of access

lines. Starting with 1Q 09 the category ‘Other’ revenues includes ‘Payphones & Value Added Ser-

vices’ as well as ‘Other’ revenues. In the Mobile Communication segment ‘Traffic and Monthly

Rental’ revenues were condensed and included in ‘Subscription and Traffic’ revenues reflecting the

trend towards flat rates or packages.

The breakdown of revenues in previous years has been adapted accordingly for comparison pur-

poses. The quarterly revenue breakdown of the previous year based on the new revenue split is

available on Telekom Austria’s homepage www.telekomaustria.com


http://www.telekomaustria.com/

Fixed Net segment

Year-to-Date Comparison

Fixed Net revenues decreased by 11.2% to EUR 926.4 million in the first half of 2009 mainly driven

by lower revenues from Access, Voice & Broadband and from Wholesale Voice & Internet. The first

six months of 2008 included cumulative revenues of EUR 19.8 million from eTel Polska as well as

eTel Slovensko and Telekom Austria Czech Republic, which were sold in February 2008 and No-

vember 2008 respectively.

Note: Detailed data of the Fixed Net segment are shown in the appendix

on page 24

Reduction of operating expenses by 14.1%

EBITDA declined by 4.0% to EUR 299.8 million in the first half of 2009 compared to the first half

of 2008 as a reduction of operating expenses of 14.1% partly offset lower revenues. The reduction

of operating expenses reflects lower interconnection costs, lower material expenses, the imple-

mented restructuring program as well as the disposal of subsidiaries in 2008.

Operating income grew by 29.1% to EUR 68.4 million due to a reduction in depreciation and amor-

tization charges.

Fixed Net

in EUR million 1H 09 1H 08 % change

Revenues 926.4 1,043.8 -11.2%

EBITDA 299.8 312.4 -4.0%

Operating income 68.4 53.0 29.1%

Mobile Communication segment

Revenues in the Mobile Communication segment declined slightly by 1.2% to EUR 1,590.9 million in

the first six months of 2009 mainly due to lower revenues in Croatia, Bulgaria and Austria. Reve-

nues were impacted primarily by the expiry of the national roaming agreement in Croatia and

lower international roaming revenues. The foreign currency translation negatively impacted reve-

nues by an amount of EUR 28.0 million. On a local currency basis, revenues grew by 0.5%.

Note: Detailed data of the Mobile Communication segment are shown

in the appendix on pages 25, 26 & 27.

Revenues and EBITDA impacted by lower roaming business

EBITDA declined by 5.0% to EUR 620.0 million in the first half of 2009 as a higher EBITDA contri-

bution from Belarus and the reduction of losses associated with the launch of operations in the

Republic of Serbia and the Republic of Macedonia partly offset a lower EBITDA contribution from

Bulgaria, Croatia and Slovenia. The negative impact of foreign currency translation amounted to

EUR 9.2 million. On a local currency basis, EBITDA declined by 3.6%.

Operating income declined by 11.3% to EUR 296.5 million in the first six months of 2009 compared

to EUR 334.2 million in the same period of the previous year primarily as a result of lower EBITDA

and higher depreciation and amortization charges. On a local currency basis, operating income

decreased by 11.5%.

Mobile Communication


Revenues 1,590.9 1,610.8 -1.2%

EBITDA 620.0 652.8 -5.0%

Operating income 296.5 334.2 -11.3%


Consolidated Net Income

During the first half of 2009 net interest expenses increased by 12.9% to EUR 115.3 million com-

pared to the same period of the previous year due to the restructuring program, which led to addi-

tional non-cash interest expenses in the amount of EUR 18.0 million.

Foreign exchange differences in the financial result turned from a gain of EUR 13.5 million in the

first half of 2008 to a loss of EUR 14.1 million in the first half of 2009 mainly due to the devalua-

tion of the Ruble in Belarus and the Dinar in the Republic of Serbia since January 2009 and more

favorable USD-exchange rates in 2008.

In the first six months of 2009 income tax expense amounted to EUR 50.1 million compared to

EUR 63.8 million in the same period of 2008 mainly due to lower income before income tax. The

effective tax rate increased from 22.0% in the first half of 2008 to 23.0% in the first half of

2009.

Net income impacted by lower EBITDA and higher financial result

Net income was EUR 167.6 million compared to a net income of EUR 226.0 million in the first half

of 2008.

Basic and diluted earnings per share amounted to EUR 0.38 in the first half of 2009 compared to

EUR 0.51 in the same period in 2008.

Balance Sheet and Net Debt

Total assets of the Telekom Austria Group decreased from EUR 8,997.4 million as of December 31,

2008 to EUR 8,711.5 million as of June 30, 2009.

During the first six months of 2009 current assets increased by 23.7% to EUR 1,911.3 million due

to higher cash and cash equivalents and higher short-term investments following the issue of the

EUR 750 million bond in January 2009.

Goodwill decreased by 8.3% to EUR 1,795.6 million due to currency translation adjustments mainly

resulting from the devaluation of the Belarusian Ruble in 2009. Other intangible assets declined

from EUR 2,265.6 million to EUR 2,027.3 million at the end of June 2009 mainly as a result of the

currency devaluation in Belarus and amortization exceeding additions. Property, plant and equip-

ment declined by 7.3% to EUR 2,758.6 million due to depreciation charges exceeding additions

and as a result of the devaluation of the Belarusian Ruble.

Current liabilities increased from EUR 2,220.5 million at the end of December 2008 to EUR 2,281.1

million at the end of June 2009 mainly due to higher short-term borrowings. Non-current liabilities

increased by 2.8% to EUR 4,752.0 million mainly due to a higher long-term debt as a result of the

bond issuance in January 2009, which was partly offset by the shift of a bond to short-term bor-

rowings.

Stockholders’ equity decreased from EUR 2,155.5 million as of December 31, 2008 to EUR 1,675.5

million as of June 30, 2009. Stockholders’ equity decreased due to the payment of dividends in

the amount of EUR 331.8 million and higher currency translation adjustments following the de-

valuation of the Ruble in Belarus.

Net debt stable at 2.1x EBITDA despite dividend distribution

Net debt remained stable at EUR 4,003.9 million as of June 30, 2009 as cash flow generation

offset the payment of dividends and capital expenditures. Net debt to EBITDA (last 12 months) was

3.3x at the end of June 2009 compared to 3.1x at the end of December 2008 as a result of a lower

EBITDA. Excluding the restructuring program net debt to EBITDA (last 12 months) remained stable

at 2.1x.


Cash Flow and Capital Expenditures

Cash generated from operations decreased by EUR 77.3 million to EUR 594.9 million in the first

six months of 2009 following the lower results from operations and payments for provisions.

Cash outflows for investing activities slightly increased to EUR 352.7 million in the first half of

2009 compared to EUR 346.0 million in the first half of 2008.

Cash from financing activities recorded a net inflow of EUR 28.5 million in the first six months of

2009 compared to a net outflow of EUR 349.1 million during the same period of the previous year

as a consequence of the issuance of the EUR 750 million bond at the beginning of 2009.

Cash flow and net debt


Cash generated from operations 594.9 672.2 -11.5%

Cash used in investing activities -352.7 -346.0 1.9%

Cash used in financing activities 28.5 -349.1 n.a.

Effect of exchange rate changes 40.8 9.2 n.a.

Net increase/decrease in cash and cash equivalents 311.5 -13.7 n.a.

in EUR million June 30, 09 Dec. 31, 08 % change

Net debt 4,003.9 3,993.3 0.3%

Net debt/EBITDA (12 months) excluding restructuring program 2.1x 2.1x

Total capital expenditures decreased by 24.3% to EUR 265.3 million in the first half of 2009 due

to lower capital expenditures in the Fixed Net and the Mobile Communication segment. Capital

expenditures for tangible assets declined by 27.9% to EUR 198.0 million, while capital expendi-

tures for intangible assets decreased by 11.1% to EUR 67.3 million.

Postponements and restrictive investment policy supported

reduction of Capex

In the Fixed Net segment capital expenditures decreased by 32.5% to EUR 89.4 million during the

first half of 2009 due to postponements of investments in access and core infrastructure as well

as a restrictive investment policy.

In the Mobile Communication segment capital expenditures decreased by 19.2% to EUR 175.9

million in the first half of 2009 mainly due to lower capital expenditures in Austria as well as lower

investments into access and core infrastructure in the Republic of Serbia.

Capital expenditures


Fixed Net 89.4 132.5 -32.5%

Mobile Communication 175.9 217.8 -19.2%

Total capital expenditures 265.3 350.3 -24.3%

Thereof tangible 198.0 274.6 -27.9%

Thereof intangible 67.3 75.7 -11.1%


Fixed Net

Quarterly Comparison

Note: Detailed data of the Fixed Net segment are shown in the

appendix on page 24 Fixed Net access line loss was cut by 64.1% to 12,600 lines in 2Q 09 compared to 35,100 in 2Q 08

due to stronger customer retention and new product bundles sold. The rising number of retail

broadband lines allowed an acceleration of the number of fixed net broadband lines which rose by

16.0% to 958,400 at the end of June 2009 and more than compensated for a decline in wholesale

broadband lines. Average revenues per fixed net access line declined by 8.0% in 2Q 09 to

EUR 34.5 compared to EUR 37.5 in 2Q 08 as the share of the lower priced product bundles in-

creased as well as lower voice volumes.

Access line loss cut by 2/3

The number of unbundled lines declined to 291,600 at the end of June 2009 compared to 297,500

at the end of June 2008. Fixed-to-mobile substitution is still the main driver for the decline in

voice minutes by 12.6% to 839 million minutes in 2Q 09. Fixed Net voice market share of total

voice minutes including mobile minutes decreased from 16.7% in 2Q 08 to 14.8% in 2Q 09.

Fixed Net revenues decreased by 12.5% to EUR 456.9 million in 2Q 09 mainly driven by a lower

number of access lines and declining voice volumes resulting in lower revenues from Access, Voice

& Broadband. 2Q 2008 included cumulative revenues of EUR 9.4 million from eTel Slovensko and

Telekom Austria Czech Republic, which were sold in November 2008. Furthermore lower revenues

from Data & Wholesale Voice and Internet contributed to the decrease in revenues.

Revenues decline also driven by disposal of subsidiaries

Access, Voice & Broadband revenues declined by 13.0% to EUR 240.5 million as a higher broad-

band customer base partly offset a lower total access line base and lower voice volumes.

Revenues from Data declined by 16.5% to EUR 96.7 million mainly due to a migration from leased

lines to lower priced xDSL-based business networks as well as fewer information and communica-

tion technology projects compared to the same period of the previous year.

Wholesale Voice & Internet revenues declined by 16.6% to EUR 86.6 million mainly driven by lower

wholesale voice revenues due to lower international traffic and lower prices. The reduction of the

unbundled lines as well as lower unbundled fees also contributed to this decline.

Other revenues increased by 27.7% to EUR 33.2 million due to higher revenues from voting ser-

vices for interactive TV-shows.

Operating expenses decreased by 13.1% from EUR 382.9 million to EUR 332.6 million due to lower

interconnection and employee costs following the implemented restructuring program as well as

lower material expenses. Fixed Net EBITDA declined by 8.7% to EUR 142.0 million in 2Q 09 com-

pared to 2Q 08. Lower expenses drove profitability and resulted in an improvement of the EBITDA

margin from 29.8% to 31.1%.

Profitability improved, Operating expenses reduced

Operating income rose by 1.3% to EUR 23.4 million in 2Q 09 compared to EUR 23.1 million in 2Q

08 driven by a significant reduction of depreciation and amortization charges.

Fixed Net

in EUR million 2Q 09 2Q 08 % change

Revenues 456.9 521.9 -12.5%

EBITDA 142.0 155.5 -8.7%

Operating income 23.4 23.1 1.3%



A rising number of contract subscribers in all mobile operations drove the growth of the customer

base in the Mobile Communication segment by 10.1% to 18.1 million customers as of June 30,

2009.

Note: Detailed data of the Mobile Communication segment are shown

in the appendix on pages 25, 26 & 27.

Reported revenues decline by 1.7%, organic revenue growth excluding FX is 0.2%

Revenues in the Mobile Communication segment fell slightly by 1.7% to EUR 800.6 million in 2Q

09 primarily driven by lower revenues in Croatia, Bulgaria and Austria due to the expiry of the

national roaming agreement in Croatia and lower international roaming revenues as well as lower

prices for voice and data. The foreign currency translation impacted revenues negatively by EUR

15.3 million. On a local currency basis, revenues increased by 0.2%.

Reported EBITDA declines by 1.8%, organic EBITDA excluding FX almost stable

While EBITDA rose in Austria and Belarus, total EBITDA of the Mobile Communication segment

declined by 1.8% to EUR 313.7 million in 2Q 09 mainly due to a lower contributions from Croatia,

Bulgaria and Slovenia. The losses associated with the launch of operations in the Republic of Ser-

bia and the Republic of Macedonia were further reduced from EUR 14.8 million in 2Q 08 to EUR 11.4

million in 2Q 09. The negative impact of foreign currency translation amounted to EUR 4.8 million.

On a local currency basis, EBITDA remained almost stable.

Despite a reduction of operating expenses and depreciation and amortization charges, operating

income declined by 3.1% to EUR 152.4 million in 2Q 09 compared to 2Q 08 as a consequence of

lower revenues. On a local currency basis, operating income decreased by 3.4%.

mobilkom austria The subscriber base of mobilkom austria, the leading mobile operator in Austria, grew by 8.7% to

4.6 million subscribers at the end of June 2009 mainly driven by attractively priced tariff models

and additional SIM cards for mobile broadband.



Revenues 800.6 814.3 -1.7%

EBITDA 313.7 319.4 -1.8%

Operating income 152.4 157.3 -3.1%

Strong subscriber growth in Austria

mobilkom austria maintained its market leadership with an almost stable market share of 42.3% at

the end of 2Q 09 compared to 42.5% at the end of 2Q 08. The mobile penetration rate in Austria

rose to 130.8% at the end of June 2009 compared to 119.8% in the previous year due to an in-

creasing number of customers with double SIM cards for both mobile broadband and voice services

respectively.

Average revenues per user (ARPU) decreased by 9.3% to EUR 25.5 as an increase in data usage

partly offset lower prices for voice and data. ARPU remained stable compared to 1Q 09. Average

minutes of use charged per subscriber decreased by 7.5% to 163.8 minutes in 2Q 09 primarily due

to the dilution from mobile broadband. mobilkom austria grew its mobile broadband subscriber

base by 43.0% and had 464,750 mobile broadband customers at the end of June 2009 compared

to 325,000 mobile broadband customers at the end of June 2008. The number of mobile broad-

band net adds were 23,850 in 2Q 09. Data revenues as a percentage of traffic-related revenues

rose from 31.0% in 2Q 08 to 35.1% in 2Q 09.

23,850 mobile broadband net adds in Austria in 2Q 09

Revenues of mobilkom austria declined by 1.4% to EUR 391.8 million compared to 2Q 08 mainly

driven by lower traffic revenues following lower prices for voice and data as well as lower roaming

revenues.


Subscriber acquisition costs were reduced from EUR 12.3 million in 2Q 08 to EUR 11.4 million in 2Q

09 driven primarily by lower commissions. Subscriber retention costs increased by 24.4% to EUR

20.4 million caused by a higher number of replacements as well as higher costs for high quality

handsets.

Profitability improved as mobilkom austria’s EBITDA increased by 5.4% to EUR 147.1 million in 2Q

09 compared to 2Q 08 as a result of lower marketing & sales costs as well as lower interconnec-

tion costs. 2Q 09 operating income increased by 16.9% to EUR 89.3 million due to a reduction of

depreciation and amortization charges.

Mobiltel Mobiltel, the leading mobile operator in Bulgaria, increased its customer base by 1.0% to 5.2 mil-

lion customers at the end of June 2009 compared to the end of June 2008. The number of sub-

scribers declined compared to 1Q 09 due to inactive prepaid customers, which were taken out of

the subscriber base. Mobiltel’s market share declined slightly from 50.5% to 50.0% at the end of

2Q 09 compared to the end of 2Q 08. The mobile penetration rate in Bulgaria rose from 133.8% in

the previous year to 137.5%.

Average minutes of use charged per subscriber increased by 14.4% to 98.6 minutes in 2Q 09

which partly compensated for lower prices limiting the ARPU decline to 4.0% or EUR 9.5 in 2Q 09

compared to 2Q 08.

Revenues of Mobiltel declined from EUR 165.6 million in 2Q 08 to EUR 157.7 million in 2Q 09

mainly due to lower subscription and traffic revenues. A higher contract subscriber base partly

offset lower prices as a consequence of fierce competition. In general, the economic slowdown in

Bulgaria primarily impacted Mobiltel’s business segment. In the private customer segment usage

continued to grow, but the growth was shifted to cheaper priced on-net minutes.

Rate of EBITDA decline improved compared to 1Q 09

EBITDA decreased from EUR 96.0 million in 2Q 08 to EUR 87.9 million in 2Q 09 mainly due to

lower revenues and lower other operating income. The rate of decline materially improved com-

pared to 1Q 09. Operating expenses could be reduced by EUR 2.3 million mainly due to savings in

marketing and sales and material expenses, whereas interconnection costs rose due to rising traf-

fic into other networks partly offset by lower mobile-to-fixed tariffs.

Mobiltel’s operating income decreased from EUR 51.9 million in 2Q 08 to EUR 42.8 million in 2Q

09 as lower expenses partly offset lower revenues.

Velcom At the end of June 2009 Velcom, the second largest mobile operator in Belarus, grew its

subscriber base by 13.3% to 3.8 million customers compared to 3.4 million at the end of June

2008. Velcom’s market share declined from 44.4% at the end of June 2008 to 43.1% at the end

of June 2009 due to the rising market share of the third operator in Belarus. The penetration rate

in Belarus rose from 78.2% to 91.5% at the end of June 09.

Average minutes of use charged per subscriber decreased by 6.2% to 155.5 minutes in 2Q 09

compared to 2Q 08. ARPU amounted to EUR 6.4 in 2Q 09 compared to EUR 6.9 in the previous

year. In local currency ARPU increased by 6.9%.

Revenues grew by 6.3% from EUR 71.1 million in 2Q 08 to EUR 75.6 million in 2Q 09 driven by

higher revenues from subscription and traffic due to a larger subscriber base. Currency translation

differences following the devaluation of the Belarusian Ruble in 2009 impacted revenues with an

amount of EUR 11.0 million. In local currency, revenue growth was 21.9%.

Organic revenue growth in Belarus of 21.9%


In 2Q 09 EBITDA rose by 10.9% to EUR 38.8 million compared to EUR 35.0 million in 2Q 08 as

revenue growth more than offset higher interconnection expenses and costs for services received.

In local currency, EBITDA increased by 27.3%.

Reported EBITDA growth of 10.9%, organic EBITDA growth excluding

FX translation of 27.3%

Velcom’s operating income in 2Q 09 grew by 23.1% to EUR 20.8 million compared to EUR 16.9

million in 2Q 08 despite higher depreciation and amortization charges. Excluding the impact of the

currency translation in the amount of EUR 3.2 million, operating income grew by 41.9%.

Vipnet Vipnet, the second largest mobile operator in Croatia, increased its subscriber base by 14.8% to

2.6 million customers at the end of June 2009.

At the end of the second quarter 2009 the mobile penetration rate in Croatia was 136.5% com-

pared to 122.1% at the end of 2Q 08. Vipnet’s market share increased to 43.3% in 2Q 09 from

42.2% in 2Q 08 due to fierce competition.

ARPU declined by 17.4% to EUR 12.3 in 2Q 09 compared to EUR 14.9 in 2Q 08 as a higher contract

subscriber base partly compensated for lower interconnection revenues, declining voice volume

per subscriber and lower prices. Average minutes of use charged per subscriber declined by 9.6%

to 84.1 minutes.

Revenues of Vipnet declined by 6.9% to EUR 119.3 million in 2Q 09 compared to EUR 128.2 million

in 2Q 08 due to lower wholesale roaming revenues mainly as a result of the expiry of the national

roaming agreement with a competitor in 2008 as well as lower subscription and traffic revenues

as a result of lower prices and usage. Lower interconnection revenues, as a result of a reduction of

mobile termination rates, which took effect as of March 2009, also contributed to this decline.

The expiry of the national roaming agreement in 2Q 08 impacted reve-

nues and EBITDA of Vipnet

EBITDA decreased by 17.8% to EUR 40.6 million in 2Q 09 mainly due to lower revenues.

Operating income of Vipnet decreased by 27.0% to EUR 22.7 million in 2Q 09 compared to the

same period of the previous year reflecting lower revenues and slightly higher depreciation and

amortization charges.

Si.mobil Si.mobil, the second largest operator in Slovenia, grew its subscriber base by 8.8% to 581,800

customers at the end of June 2009.

Si.mobil increased its market share from 27.2% to 28.0%. The mobile penetration rate in Slovenia

was 102.4% at the end of 2Q 09 compared to 98.0% at the end of 2Q 08.

ARPU decreased by 10.2% to EUR 21.2 primarily driven by lower interconnection revenues partly

offset by a higher contract subscriber base and an increase in average minutes of use charged per

subscriber, which rose by 9.2% to 147.8 minutes as a result of a higher contract share and positive

effects from new tariffs.

Revenues decreased by 8.6% to EUR 42.4 million during 2Q 09 mainly due to lower subscription

and traffic revenues as well as interconnection revenues resulting from the symmetry of termina-

tion rates with the incumbent introduced in April 2009.

Lower and symmetric mobile termi-nation rates impacted both revenues

and EBITDA of Si.mobil

EBITDA decreased from EUR 15.5 million in 2Q 08 to EUR 11.4 million in 2Q 09 due to lower reve-

nues.

Operating income decreased from EUR 10.1 million in 2Q 08 to EUR 5.8 million in 2Q 09 due to

higher depreciation and amortization charges.


Vip mobile Vip mobile, the third largest mobile operator in the Republic of Serbia, grew its subscriber base by

60.1% to 1.1 million customers at the end of June 2009 from 0.7 million customers at the end of

June 2008 and had a market share of 10.7% at the end of 2Q 09 compared to 7.2% at the end of

2Q 08.

The penetration rate in the Republic of Serbia stood at 133.2% at the end of 2Q 09 compared to

123.9% at the end of 2Q 08, also reflecting an inflated subscriber number reported by the incum-

bent.

During 2Q 09 Vip mobile increased its revenues by 44.9% to EUR 18.4 million compared to EUR

12.7 million in 2Q 08 as a result of higher subscription and traffic revenues driven by a larger sub-

scriber base and higher usage.

The negative EBITDA improved to EUR 7.4 million compared to EUR 9.6 million in 2Q 08. The

operating loss was EUR 22.8 million in 2Q 09 compared to a loss of EUR 21.8 million in 2Q 08.

Negative EBITDA in Republic of Serbia further reduced

Vip operator Vip operator, the third largest mobile operator in the Republic of Macedonia, had 224,400 cus-

tomers in 2Q 09 compared to 209,200 customers in 2Q 08. Vip operator’s market share was

9.6% at the end of 2Q 09 compared to 9.9% in 2Q 08 due to a drop in prepaid subscribers caused

by an earlier promotions churn. At the end of June 2009 the penetration rate in the Republic of

Macedonia was 114.6%.

Vip operator’s revenues more than doubled to EUR 5.2 million in 2Q 09 compared to EUR 2.5 mil-

lion in 2Q 08 as a result of higher subscription and traffic revenues driven by the strong increase

of customer base and usage.

Operating performance in the Repub-lic of Macedonia improves as reve-

nues more than doubled

The negative EBITDA of the company improved from EUR 5.2 million in 2Q 08 to EUR 4.0 million in

2Q 09, reflecting a continuing enhancement of the operating performance.

Operating loss was reduced to EUR 5.7 million in 2Q 09 compared to an operating loss of EUR 6.1

million in 2Q 08.

Consolidated Net Income

In 2Q 09 net interest expenses increased to EUR 56.2 million from EUR 51.3 million during 2Q 08

due to the restructuring program, which led to additional non-cash interest expenses.

2Q 09 showed insignificant effects from foreign exchange differences on the financial result.

Income tax expense decreased from EUR 27.2 million in 2Q 08 to EUR 25.9 million due to a lower

income before income tax in 2Q 09.

Net income amounted to EUR 82.3 million in 2Q 09 after a net income of EUR 96.3 million in 2Q

08. Basic and diluted earnings per share amounted to EUR 0.19 in 2Q 09.

Net income primarily impacted by lower EBITDA and

financial result

Cash Flow and Capital Expenditures

During 2Q 09 cash generated from operations decreased by 5.4% to EUR 347.2 million mainly due

to lower results from operations as well as higher payments to settle provisions and accrued li-

abilities.

Cash outflow from investing activities decreased from EUR 191.0 million in 2Q 08 to EUR 143.7

million in 2Q 09 mainly due to lower capital expenditures.


Net cash outflow from financing activities increased from EUR 169.4 million in 2Q 08 to EUR 363.8

million in 2Q 09 as the dividend distribution was partly offset by issuance of long-term debt in 2Q

08.

Cash Flow


Cash from operations 347.2 367.1 -5.4%

Cash from investing -143.7 -191.0 -24.7%

Cash from financing -363.8 -169.4 n.a.

Effect of exchange rate changes 9.2 -1.3 n.a.

Net increase/decrease in cash and cash equivalents -151.1 5.5 n.a.

During 2Q 09 total capital expenditures were reduced by 21.7% to EUR 149.3 million. Capital ex-

penditures for tangible assets decreased by 23.2% to EUR 117.0 million and capital expenditures

for intangible assets declined by 15.7% to EUR 32.3 million.

Reduction of capital expenditures by 21.7% to support free cash flow

In the Fixed Net segment capital expenditures decreased by 13.2% to EUR 55.9 million during 2Q

09, mainly due to a postponement of investments into the access and core net infrastructure as

well as a restrictive investment policy.

In the Mobile Communication segment capital expenditures decreased by 26.0% to EUR 93.4

million in 2Q 09 as lower capital expenditures in Austria, Bulgaria and the Republic of Serbia offset

higher capital expenditures in Croatia.

Capital expenditures


Fixed Net 55.9 64.4 -13.2%

Mobile Communication 93.4 126.3 -26.0%

Total capital expenditures 149.3 190.7 -21.7%

Thereof tangible 117.0 152.4 -23.2%

Thereof intangible 32.3 38.3 -15.7%


Selected Explanatory Notes to the Consolidated Interim Financial Statements (unaudited)

Additional Information & Selected Notes

Basis of Presentation

The consolidated interim financial statements, in the opinion of management, include all adjust-

ments necessary for a fair presentation in accordance with International Financial Reporting Stan-

dards (IFRS).

These financial results in accordance with IAS 34 “Interim Financial Reporting” are unaudited and

should be read in connection with the Telekom Austria Group's annual consolidated financial

statements according to IFRS for the year ended December 31, 2008. The consolidated results for

the interim periods are not necessarily indicative of results for the full year.

No major related party transactions, commitments and guarantees occurred since December 31,

2008.

The preparation of the interim financial statements in conformity with IFRS requires the Telekom

Austria Group to make estimates and assumptions that affect the amounts reported in the finan-

cial statements and accompanying notes. Actual results could differ from these estimates.

The Telekom Austria Group has applied the same accounting policies and methods of computation

in the interim financial statements as in the annual financial statements as of and for the year

ended December 31, 2008 except for IFRIC 12- Service Concession Arrangements, IFRIC 13 - Cus-

tomer Loyalty Programmes, IFRIC 15 - Agreements for the Construction of Real Estate, IFRIC 16 -

Hedges of a Net Investment in a Foreign Operation and IAS 32 and IAS 1 - Puttable Financial in-

struments and Obligations arising on Liquidation, which became effective during 2008 and as of

January 1, 2009.

The Telekom Austria Group has adopted these standards/interpretations as of January 1, 2009.

IFRIC 13 addresses the accounting of customer loyalty programs that are operated either by the

manufacturer or service provider or by a third party. The award credit granted is accounted for as

a separate component of the sales transaction and recognized as deferred revenue until it is either

redeemed by the customer or forfeited. The adoption of IFRIC 13 led to a reclassification of ap-

proximately EUR 20.9 million from provisions and accrued liabilities to deferred income. Compara-

tive figures were adjusted accordingly. The effect on net income was immaterial. The effects of the

other new standards/interpretations, if any, on the consolidated financial statements were insig-

nificant.

Compared to other economic sectors the telecommunications industry is in general less cyclical.

Within the telecommunication sector the seasonality of the Telekom Austria Group’s Fixed Net and

Mobile Communication segment shows the same pattern as other European incumbents, having

lower margins in the year-end quarter due to Christmas promotions, equipment provided to cus-

tomers and increases in sales commissions. However, in the Mobile Communication segment cus-

tomer and visitor roaming revenues are above average in the third quarter due to the summer

vacation season. In Austria visitor roaming is also above average in the first quarter due to winter

sports tourism.

Business Combinations and Investments In March 2009, the Telekom Austria Group acquired 25.029% stake in Marx Media Vienna GmbH

in the Fixed Net segment for an aggregate purchase price of EUR 3.2 million, which was paid in

cash.


In February 2009 the Telekom Austria Group sold the stake of 37.47% in Infotech Holding GmbH

for a sales price of EUR 7.0 million, which was paid in cash. The investment had been reported as

asset held for sale in the Fixed Net segment as of December 31, 2008.

Since June 1, 2009, the Telekom Austria Group controls 100% of CRI Beteiligungs GmbH. The

aggregate purchase price amounted to EUR 10.6 million. CRI Beteiligungs GmbH was acquired in

the Fixed Net segment. CRI Beteiligungs GmbH holds 76% in Cable Runner Austria GmbH, a tech-

nology company running glass fiber cable in sewage circuits.

Acquisition of CRI in EUR million (unaudited)

Fair values on

acquisition Fair value

adjustments

Carryingamounts

before thecombination

Property, plant and equipment 21.2 0.0 21.2

Intangible assets 2.8 1.6 1.2

Other non-current assets 0.6 0.0 0.6

Deferred tax assets 6.5 6.4 0.1

Trade and other receivables 4.3 0.0 4.3

Cash and cash equivalents 1.1 0.0 1.1

Loans and borrowings -3.2 0.0 -3.2

Trade and other payables -16.1 0.0 -16.1

Net identifiable assets and liabilities 17.2 8.0 9.2

Non-controlling interests -2.9

Badwill on acquisition -3.7

Total Consideration 10.6

Cash acquired -1.1

Net cash outflow 9.5

The table above summarises the assets acquired and liabilities assumed at the date of acquisition

as well as the carrying amounts according to IFRS as determined prior to the acquisition. Fair

values were determined based on the provisional purchase price allocation to assets and liabilities.

Since the effect of the acquired entity prior to the acquisition on the consolidated financial state-

ments of the Telekom Austria Group is not considered significant, no pro forma information is

presented.

On April 30, 2009 the Telekom Austria Group acquired 25.1% interest in DSA BeteiligungsGmbH in

the Fixed Net segment. Acquisition cost amounted to EUR 0.4 million. Additionally the Telekom

Austria Group signed an option-agreement for EUR 0.5 million to acquire an additional 25% inter-

est (options exercisable in the second quarter 2012).

Foreign Exchange Differences Starting Q1 2009 all foreign exchange gains and losses are shown within the financial result,

whereas until 2008 only foreign exchange differences relating to financing activities were re-

ported therein. Foreign exchange differences relating to other activities were reported in operat-

ing expenses or other operating income. The new presentation provides a more reliable and rele-

vant view on the operating result. Comparative figures for 2008 were adjusted accordingly.

Non-current liabilities, Short-Term Borrowings An amount of EUR 449.9 million of long-term debt was repaid in the six month period ended June

30, 2009. On January 29, 2009, the Telekom Austria Group issued a bond on the Eurobond mar-

ket with a face value of EUR 750.0 million, a maturity of 7 years, disagio and issue costs of EUR 8.0

million and a coupon of 6.375%.


Long-term debt increased mainly due to the issuance of the bond, which was partly compensated

by the shift of a bond under the EMTN program to short-term borrowings.

In the six month period ended June 30, 2009 12 transactions of Cross Border Lease were termi-

nated early. As a result the Telekom Austria Group realized an expense of EUR 7.6 million and

income from the realization of the deferred unamortized balance on the sale of the tax benefit

allocated to these transactions amounting to EUR 8.8 million. Thus, the Telekom Austria Group

recognized the net amount of EUR 1.2 million in interest income. As a result of the early termina-

tion, contingent liabilities decreased to EUR 75.6 million.

Income Taxes The effective tax rate for the six month periods ended June 30, 2009 and 2008 was 23.0% and

22.0%. In the six month period ended June 30, 2009, the effective tax rate was lower than the

Austrian statutory tax rate of 25% mainly due to tax incentives.

Net deferred tax liabilities of EUR 44.7 million as of December 31, 2008 decreased to EUR 24.3

million mainly due to foreign exchange differences and the amortization and depreciation of fair

value adjustments of assets acquired in business combinations.

Stock Based Compensation In the first quarter 2009 the Telekom Austria Group launched the sixth tranche (or ESOP 2009+)

of the stock option plan 2004.

For the six month period ended June 30, 2009 and 2008 the Telekom Austria Group recorded an

expense of EUR 0.6 million and a benefit of EUR 6.9 million, respectively, excluding related payroll

taxes and social contributions. The benefit in the six month period ended June 30, 2008 is mainly

due to the decline of the Telekom Austria share price at June 30, 2008 compared to December 31,

2007.

Compensation expense is measured based on the fair value of the options at each reporting date

and recognized over the service period on a straight-line basis. The fair value estimation is based

on a binomial option pricing model by applying the parameters summarized in the following table.

ESOP Parameters June 30, 09 Dec. 31, 08

Expected average dividend per share (in Euro) 0.74-0.87 0.75- 0.94

Expected volatility 55% 55%

Risk-free interest rate range 0.401%-2.616% 2.750%- 3.354 %

Stock price (in Euro) 11.14 10.30

Fair value per option second tranche (in Euro) - 0.47

Fair value per option third tranche (in Euro) 0.38 0.44

Fair value per option fourth tranche (in Euro) 0.72 0.62

Fair value per option fifth tranche (in Euro) 0.91 0.75

Fair value per option sixth tranche (in Euro) 1.28 -

Foreign currency translation adjustment The foreign currency translation adjustment mainly results from the consolidation of Velcom in

Belarus and Vip mobile in Serbia. Main driver was the devaluation of the Belarusian Ruble which

resulted in an adjustment amounting to EUR 290.3 million in the six month period ended June 30,

2009.


Segment Reporting In 2009, the Telekom Austria Group reduced estimated useful lives of certain technical and office

equipment due to the rapid development of technological environment in the relevant areas. The

change in estimate resulted in an increase of depreciation by EUR 1.8 million in the Mobile Commu-

nication segment.

Risks & Uncertainties

The Telekom Austria Group faces various risks and uncertainties that could affect its results.

These risks include, but are not limited to, a further reduction of prices for mobile communication

services in Austria and elsewhere and an acceleration of fixed-to-mobile substitution resulting in

further access line loss and a decline in fixed net minutes.

The Telekom Austria Group is also subject to risks related to the planned reduction of the number

of employees in the Fixed Net segment. Furthermore, the Telekom Austria Group is subject to

intensive regulation.

Through its expansion into the Eastern and South-Eastern European region, the company operates

in markets that have been experiencing political and economic change. This circumstance has

affected and may continue to affect the activities of enterprises operating in this environment.

Consequently, operations in the Eastern and South-Eastern European region involve uncertainties,

including foreign exchange and tax uncertainties that typically do not exist in other markets.

In recent years, the growth of Telekom Austria Group’s business was marked by an expansion in

various markets in Eastern and South-Eastern Europe. However, further growth will be affected by

a number of factors over which Telekom Austria Group has no influence. Further organic growth

also depends on the growth of the respective economies and individual telecommunication mar-

kets the Telekom Austria Group operates in.

Personnel

The total number of employees of the Telekom Austria Group declined by 825 to 16,859 employ-

ees at the end of June 2009 compared to the same period of the previous year.

The workforce in the Fixed Net segment decreased by 1,238 to 8,216 full-time equivalents. 254

full-time equivalents were reduced due to the sale of eTel Slovensko and Telekom Austria Czech

Republic. The remaining decrease is related primarily to the restructuring program. Within this

framework 433 employees have accepted a social plan and left the company as of June 30, 2009.

Fixed Net workforce declines by 1,238 employees

433 employees left with a social

plan

The number of employees of the Mobile Communication segment increased by 413 to 8,643 em-

ployees mainly as a result of a larger workforce in the operations of Belarus and the Republic of

Serbia.

Other Events

The Telekom Austria Group was informed in April 2009 that the shareholding of UBS AG, Zurich

was 29,559,356 shares or 6.43% as of March 27, 2009 and the shareholding of Capital Research

and Management Company was 46,059,136 shares or 10.01% as of April 7, 2009.

In April 2009 the regulator decided to lower termination rates compared to the previous schedule

published in 2007. The termination rates of the Austrian mobile communication operators were

reduced retroactively to a uniform termination rate of 5.72 cents as of July 1, 2008, equivalent to

the level implemented by mobilkom austria since January 1, 2008. In addition, the uniform termi-

nation rate of all Austrian mobile communication operators was reduced retroactively from 5.72

cents to 4.50 cents as of January 1, 2009. On June 17, 2009 the Austrian Regulatory Authority

Mobile termination rates in Austria retroactively lowered


announced the gliding path for the reduction of the mobile termination rates to 2.01 cent by June 1,

2011 with incremental reductions of 0.5 cents.

As of June 1, 2009, mobile operators have to pay an additional 10% tax on selected revenues in

the Republic of Serbia. This tax refers to revenues from SMS, MMS, voice services, data transfers

(internet traffic) as well as special services.

On June 18, 2009 the Austrian National Council passed an amendment of the Telecommunications

Act. The amendment allows for a more economical rollout of new fixed net infrastructure and

replacement of the existing infrastructure. Furthermore, changes in the regulatory framework

support an improved return on investments in infrastructure.

Austrian National Council passed amendment of Telecommunications

Act

Subsequent Events

End of July 2009 the Croatian Parliament has passed an act which introduces a monthly tax on

the mobile operators services effective August 1, 2009. According to the act, the mobile operators

are obliged to pay a monthly fee of 6% on revenues from SMS, MMS and voice services.

In July 2009 the 25.1% interest in DSA BeteiligungsGmbH was sold. The sale had no material

financial effect.

The Management Board has resolved to cancel 17 million treasury shares or 3.7% of Telekom Aus-

tria AG share capital as of August 24, 2009. Thus, the number of shares issues will be reduced to

443 million and the cancellation increases stakes of remaining shareholders by 3.8%.

Disclaimer: This document contains forward-looking statements that involve risks and uncertainties. These forward-looking statements are usually accompa-nied by words such as “believe,” “intend,” “anticipate,” “plan,” “expect” and similar expressions. Actual results may differ materially from those anticipated in these forward-looking statements as a result of a number of factors. Forward-looking statements involve inherent risks and uncertainties. A number of impor-tant factors could cause actual results or outcomes to differ materially from those expressed in any forward-looking statement. These factors include, but are not limited to, the following: • the level of demand for telecommunications services or equipment, particularly with regard to access lines, traffic, bandwidth and new products; • competitive forces in liberalized markets, including pricing pressures, technological developments, alternative routing developments and new access tech-

nologies, and our ability to retain market share in the face of competition from existing and new market entrants; • the effects of our tariff reduction or other marketing initiatives; • the regulatory developments and changes, including the levels of tariffs, the terms of interconnection, unbundling of access lines and international settle-

ment arrangements; • our ability to achieve cost savings and realize productivity improvements; • the success of new business, operating and financial initiatives, many of which involve start-up costs, and new systems and applications, particularly with

regard to the integration of service offerings; • our ability to secure the licenses we need to offer new services and the cost of these licenses and related network infrastructure build-outs; • the progress of our domestic and international investments, joint ventures and alliances • the impact of our new business strategies and transformation program; • the availability, terms and deployment of capital and the impact of regulatory and competitive developments on capital expenditure; • the outcome of litigation in which we are involved; • the level of demand in the market for our shares which can affect our business strategies; • changes in the law including regulatory, civil servants and social security law, including pensions and tax law; and general economic conditions, government

and regulatory policies, and business conditions in the markets we serve. Through its expansion into the Eastern and South-eastern European region, the company operates in markets that have been experiencing political and eco-nomic change. This circumstance has affected, and may continue to affect, the activities of enterprises operating in this environment. Consequently, opera-tions in the Eastern and South-eastern European region involve uncertainties, including tax uncertainties and risks related to foreign exchange rates that typically do not exist in other markets. Due to rounding differences deviations in subtotals and totals may occur.


Condensed Consolidated Financial Statements Telekom Austria Group

Condensed Consolidated Statements of Operations

2Q 09 2Q 08 1H 09 1H 08

in EUR million, except per share information unaudited unaudited unaudited unaudited

Operating revenues 1,191.7 1,276.2 2,388.8 2,535.8

Other operating income 20.0 23.0 33.3 44.1

Operating expenses

Materials -89.3 -94.3 -188.2 -194.8

Employee expenses, including benefits and taxes -200.8 -213.6 -405.8 -418.0

Depreciation and amortization -279.6 -294.4 -554.3 -577.8

Impairment charges -0.2 0.0 -0.2 0.0

Other operating expenses -471.6 -522.8 -923.3 -1,012.9

Operating income 170.2 174.1 350.3 376.4

Financial result

Interest income 6.1 4.8 17.0 11.4

Interest expense -62.3 -56.1 -132.3 -113.5

Foreign exchange differences -1.1 0.8 -14.1 13.5

Result from financial assets -4.8 0.1 -3.6 1.9

Equity in earnings of affiliates 0.1 -0.2 0.4 0.1

Income before income taxes 108.2 123.5 217.7 289.8

Income taxes -25.9 -27.2 -50.1 -63.8

Net income 82.3 96.3 167.6 226.0

Attributable to:

Owners of the parent 82.4 96.3 167.7 225.9

Non-controlling interests -0.1 0.0 -0.1 0.1

Basic and fully diluted earnings per share 0.19 0.22 0.38 0.51

Weighted-average number of ordinary shares outstanding 442,398,222 442,211,742 442,398,222 442,211,742

Condensed Consolidated Statements of Comprehensive Income


2Q 09 2Q 08 1H 09 1H 08

in EUR million unaudited unaudited unaudited unaudited

Net income 82.3 96.3 167.6 226.0

Unrealized result on securities available-for-sale 0.4 -0.2 0.9 -0.7

Income tax (expense) benefit -0.1 0.1 -0.2 0.2

Realized result on securities available-for-sale -0.1 0.1 -0.1 0.0

Unrealized result on hedging activities 3.0 1.2 -10.9 1.2

Income tax (expense) benefit -0.1 0.0 0.8 0.0

Foreign currency translation adjustment -47.9 31.9 -306.4 -67.2

Other comprehensive income (loss) -44.8 33.0 -315.9 -66.5

Total comprehensive income (loss) 37.5 129.4 -148.3 159.5

Attributable to:

Owners of the parent 37.6 129.3 -148.2 159.4

Non-controlling interests -0.1 0.1 -0.1 0.1


Condensed Consolidated Balance Sheets

June 30, 09 Dec. 31, 08 in EUR million unaudited audited ASSETS Current assets

Cash and cash equivalents 696.3 384.8 Short-term investments 160.4 86.0 Accounts receivable - trade, net of allowances 674.9 724.3 Receivables due from related parties 3.1 3.2 Inventories 118.7 128.5 Prepaid expenses 141.7 112.6 Income taxes receivable 38.2 32.9 Non-current assets held for sale 3.2 6.3 Other current assets 74.8 66.8

Total current assets 1,911.3 1,545.4 Non-current assets

Investments in associates 7.8 4.2 Financial assets long-term 38.0 43.0 Goodwill 1,795.6 1,958.5 Other intangible assets, net 2,027.3 2,265.6 Property, plant and equipment, net 2,758.6 2,976.0 Other non-current assets 48.2 61.3 Deferred tax assets 124.7 143.4

Total non-current assets 6,800.2 7,452.0 TOTAL ASSETS 8,711.5 8,997.4 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities

Short-term borrowings -1,158.5 -961.5 Accounts payable - trade -455.0 -589.2 Provisions and accrued liabilities -219.9 -228.4 Payables to related parties -8.9 -13.7 Income taxes payable -20.0 -20.2 Other current liabilities -259.1 -232.4 Deferred income -159.7 -175.1

Total current liabilities -2,281.1 -2,220.5 Non-current liabilities

Long-term debt -3,087.2 -2,917.4 Lease obligations and Cross Border Lease -20.6 -29.7 Employee benefit obligation -119.3 -117.4 Provisions long-term -689.2 -691.4 Deferred tax liabilities -149.0 -188.1 Other non-current liabilities and deferred income -686.7 -677.3

Total non-current liabilities -4,752.0 -4,621.3 Stockholders’ equity

Common stock -1,003.3 -1,003.3 Treasury shares 330.8 330.8 Additional paid-in capital -547.3 -547.3 Retained earnings -841.1 -1,005.2 Revaluation reserve 22.9 13.4 Translation adjustments 362.5 56.1

Equity attributable to equity holders of the parent -1,675.5 -2,155.5

Non-controlling interests -2.9 -0.1 Total stockholders’ equity -1,678.4 -2,155.6 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY -8,711.5 -8,997.4



Condensed Consolidated Statements of Cash Flows

2Q 09 2Q 08 1H 09 1H 08 in EUR million unaudited unaudited unaudited unaudited

Cash flow from operating activities

Net Income 82.3 96.4 167.6 226.0 Adjustments to reconcile net income to operating cash flow

Depreciation, amortization and impairment charges 279.8 294.4 554.5 577.8 Write-offs from and appreciation to investments 0.0 0.1 0.0 0.1 Employee benefit obligation - non-cash 1.8 2.2 2.1 4.6 Allowance for doubtful accounts 12.9 9.1 23.2 19.3 Change in deferred taxes 2.4 4.0 -14.2 15.4 Equity in earnings of affiliates - non-cash -0.1 0.2 -0.4 -0.1 Stock compensation 0.0 3.2 0.6 -6.9 Asset retirement obligation - accretion expense 1.8 1.3 3.6 2.5 Provision for restructuring - accretion expense 9.0 0.0 18.0 0.0 Result on sale of investments -0.1 0.1 -1.1 -1.7 Result on disposal / retirement of equipment -0.6 -5.3 0.0 -10.3 Other 1.7 0.8 18.9 0.1

390.9 406.4 772.8 826.8 Changes in assets/liabilities, net of business combinations

Accounts receivable - trade -12.2 -48.0 17.3 -28.8 Receivables due from related parties -0.2 -0.8 0.5 -0.0 Inventories 3.4 3.9 10.3 3.6 Prepaid expenses and other assets 3.8 2.1 -28.3 -28.2 Accounts payable - trade -16.7 -7.1 -112.8 -91.5 Employee benefit obligation -0.2 -0.3 -0.4 -0.8 Provisions and accrued liabilities -22.6 -12.1 -31.7 -2.1 Payables due to related parties 1.7 6.2 -4.9 -6.1 Other liabilities and deferred income -0.7 16.8 -27.9 -0.6 -43.7 -39.3 -177.9 -154.6 Cash flow from operating activities 347.2 367.1 594.9 672.2

Cash flow from investing activities Capital expenditures, including interest capitalized -149.3 -190.7 -265.3 -350.3 Acquisitions of subsidiaries, net of cash acquired -9.5 -7.3 -12.7 -9.3 Sale of subsidiary, net of cash 0.7 0.0 7.7 1.4 Proceeds from sale of equipment 1.8 9.9 2.6 16.8 Purchase of investments 9.2 -3.2 -91.8 -6.3 Proceeds from sale of investments 3.4 0.3 6.8 1.7 Cash flow from investing activities -143.7 -191.0 -352.7 -346.0

Cash flow from financing activities Proceeds from issuance of long term debt 0.0 137.5 750.0 137.5 Principal payments on long-term debt 0.0 0.0 -449.9 -327.3 Changes in short-term borrowings -32.0 24.8 60.2 172.4 Dividends paid -331.8 -331.7 -331.8 -331.7 Cash flow from financing activities -363.8 -169.4 28.5 -349.1 Effect of exchange rate changes 9.2 -1.3 40.8 9.2

Change in cash and cash equivalents -151.1 5.5 311.5 -13.7 Cash and cash equivalents at beginning of period 847.4 189.9 384.8 209.1 Cash and cash equivalents at end of period 696.3 195.4 696.3 195.4



Condensed Consolidated Statement of Changes in Stockholders´ Equity

in EUR million (unaudited)

Common stock

Par Value Treasury

shares

Additionalpaid-incapital

Retained earnings

Revaluation reserve

Translation adjustment Total

Non-controlling

interest

Total stockholders'

equity

Balance at January 1, 09 1,003.3 -330.8 547.3 1,005.2 -13.4 -56.1 2,155.5 0.1 2,155.6

Total comprehensive income

(loss) 167.6 -9.5 -306.4 -148.3 -0.1 -148.3

Distribution of dividends -331.8 -331.8 -331.8

Addition from acquisition 2.9 2.9

Balance at June 30, 09 1,003.3 -330.8 547.3 841.1 -22.9 -362.5 1,675.5 2.9 1,678.4

in EUR million (unaudited)

Common stock

Par Value Treasury

shares

Additionalpaid-incapital

Retained earnings

Revaluation reserve

Translation adjustment Total

Non-controlling

interest

Total stockholders'

equity

Balance at January 1, 08 1,003.3 -334.4 548.9 1,385.7 0.1 -38.3 2,565.3 0.0 2,565.3

Total comprehensive income

(loss) 225.9 0.7 -67.2 159.4 0.1 159.5

Distribution of dividends -331.7 -331.7 -331.7

Balance at June 30, 08 1,003.3 -334.4 548.9 1,280.0 0.8 -105.6 2,393.0 0.1 2,393.1

June 30, 09 Dec. 31, 08 June 30, 08

Number of shares of common stock 460,000,000 460,000,000 460,000,000

Number of treasury shares 17,601,778 17,601,778 17,788,258

Average purchase price of treasury shares 18.80 18.80 18.80



Condensed Segment Reporting

1H 09

in EUR million (unaudited) Fixed Net Mobile

Communication Corporate & Other

Eliminations Consolidated

External revenues 845.7 1,543.1 0.0 0.0 2,388.8

Intersegmental revenues 80.7 47.8 0.0 -128.5 0.0

Total revenues 926.4 1,590.9 0.0 -128.5 2,388.8

Other operating income 28.5 17.8 3.4 -16.4 33.3

Segment expenses -655.1 -988.7 -15.4 141.9 -1,517.3

EBITDA 299.8 620.0 -12.0 -3.0 904.8

Impairment charges -0.2 0.0 0.0 0.0 -0.2

EBITDA (incl. Impairment charges) 299.6 620.0 -12.0 -3.0 904.6

Depreciation and amortization -231.2 -323.5 0.0 0.4 -554.3

Operating income 68.4 296.5 -12.0 -2.6 350.3

Financial result -132.6

Income before income taxes 217.7

Segment assets 2,400.6 6,780.9 7,307.7 -7,777.7 8,711.5

Segment liabilities -1,316.3 -4,720.1 -5,616.0 4,619.3 -7,033.1

1H 08

in EUR million (unaudited) Fixed Net Mobile

Communication Corporate & Other

Eliminations Consolidated

External revenues 963.7 1,572.1 0.0 0.0 2,535.8

Intersegmental revenues 80.1 38.7 0.0 -118.8 0.0

Total revenues 1,043.8 1,610.8 0.0 -118.8 2,535.8

Other operating income 30.8 23.8 3.3 -13.8 44.1

Segment expenses -762.2 -981.8 -14.0 132.3 -1,625.7

EBITDA 312.4 652.8 -10.7 -0.3 954.2

Depreciation and amortization -259.4 -318.6 0.0 0.2 -577.8

Operating income 53.0 334.2 -10.7 -0.1 376.4

Financial result -86.6

Income before income taxes 289.8

Segment assets 2,530.3 7,420.5 6,459.8 -7,696.7 8,713.9

Segment liabilities -1,015.3 -4,969.6 -4,755.4 4,419.5 -6,320.8

Net Debt*

June 30, 09 Dec. 31, 08

in EUR million unaudited audited

Long-term debt 3,760.6 3,599.5

Short-term borrowings 1,158.5 961.5

Cash and cash equivalents, short-term and long-term investments, financing with related parties -893.8 -513.1

Derivative financial instruments for hedging purposes -21.4 -54.6

Net debt 4,003.9 3,993.3

Net debt/EBITDA (last 12 months) 3.3x 3.1x

Net debt/EBITDA (last 12 months) excl. restructuring program 2.1x 2.1x

* Cross border lease and finance lease obligations are included in long-term debt and short-term borrowings. Deposits for cross border lease are included in short-term and long-term investments. The purchase price obligation related to the acquisition of SBT is included in long-term debt.


Results by Segments

in EUR million (unaudited) 2Q 09 2Q 08 % change 1H 09 1H 08 % change

Revenues

Fixed Net 456.9 521.9 -12.5% 926.4 1,043.8 -11.2%

Mobile Communication 800.6 814.3 -1.7% 1,590.9 1,610.8 -1.2%

Corporate, Other & Eliminations -65.8 -60.0 9.7% -128.5 -118.8 8.2%

Revenues 1,191.7 1,276.2 -6.6% 2,388.8 2,535.8 -5.8%

EBITDA

Fixed Net 142.0 155.5 -8.7% 299.8 312.4 -4.0%

Mobile Communication 313.7 319.4 -1.8% 620.0 652.8 -5.0%

Corporate, Other & Eliminations -5.7 -6.4 -10.9% -15.0 -11.0 36.4%

EBITDA 450.0 468.5 -3.9% 904.8 954.2 -5.2%

Operating income

Fixed Net 23.4 23.1 1.3% 68.4 53.0 29.1%


Corporate, Other & Eliminations -5.6 -6.3 -11.1% -14.6 -10.8 35.2%


Capital Expenditures

in EUR million (unaudited) 2Q 09 2Q 08 % change 1H 09 1H 08 % change

Fixed Net 55.9 64.4 -13.2% 89.4 132.5 -32.5%


Total capital expenditures 149.3 190.7 -21.7% 265.3 350.3 -24.3%

Thereof tangible 117.0 152.4 -23.2% 198.0 274.6 -27.9%

Thereof intangible 32.3 38.3 -15.7% 67.3 75.7 -11.1%

Personnel

End of period Average of period

Personnel (full-time equivalent) June 30, 09 June 30, 08 change 2Q 09 2Q 08 change

Fixed Net 8,216 9,454 -1,238 8,333 9,357 -1,024

Mobile Communication 8,643 8,230 413 8,490 8,245 245

Telekom Austria Group 16,859 17,684 -825 16,823 17,602 -779


Key Data Fixed Net

Lines (in '000) 2Q 09 2Q 08 % change

Access lines (without broadband lines) 1,357.8 1,540.5 -11.9%

Fixed Net broadband retail lines 895.8 757.5 18.3%

Fixed Net broadband wholesale lines 62.6 68.9 -9.1%

Fixed Net broadband lines 958.4 826.4 16.0%

Total access lines 2,316.2 2,366.9 -2.1%

Lines unbundled 291.6 297.5 -2.0%

Other Operationals 2Q 09 2Q 08 % change 1H 09 1H 08 % change

Average revenues per access line (ARPL) 34.5 37.5 -8.0% 35.1 37.3 -5.9%

Total voice minutes 839 960 -12.6% 1,752 1,988 -11.9%

Fixed Net revenues in EUR million (unaudited) 2Q 09 2Q 08 % change 1H 09 1H 08 % change

Access, Voice and Broadband 240.4 276.3 -13.0% 490.4 554.1 -11.5%

Data 96.7 115.8 -16.5% 194.2 219.1 -11.4%

Wholesale Voice & Internet 86.6 103.8 -16.6% 176.6 214.6 -17.7%

Others 33.2 26.0 27.7% 65.2 56.0 16.4%

Fixed Net revenues 456.9 521.9 -12.5% 926.4 1,043.8 -11.2%

Austrian Telecommunications Market

Broadband Market Shares 2Q 09 2Q 08 % change

Telekom Austria Fixed Net Retail 29.9% 30.7% -

Telekom Austria Fixed Net Wholesale 2.1% 2.8% -

Mobile broadband mobilkom austria 15.5% 12.8% -

Mobile broadband other operators 24.0% 18.3% -

Cable 19.4% 24.1% -

Unbundled lines 9.1% 11.3% -

Broadband penetration - Total market 83.1% 70.1% -

Voice Market Shares 2Q 09 2Q 08 % change

Fixed Net Telekom Austria 14.8% 16.7% -

Fixed Net Others 8.3% 9.7% -

Mobile 76.9% 73.6% -


Key Data Mobile Communication

Mobile Communication in EUR million (unaudited) 2Q 09 2Q 08 % change 1H 09 1H 08 % change

Revenues 800.6 814.3 -1.7% 1,590.9 1,610.8 -1.2%

EBITDA 313.7 319.4 -1.8% 620.0 652.8 -5.0%


Data as a portion of traffic-related revenues 27.7% 24.4% - 28.8% 25.1% -

2Q 09 2Q 08 % change

Subscribers ('000) 18,140.1 16,468.8 10.1%

mobilkom austria* in EUR million (unaudited) 2Q 09 2Q 08 % change 1H 09 1H 08 % change

Revenues 391.8 397.4 -1.4% 795.4 806.4 -1.4%

EBITDA 147.1 139.5 5.4% 307.8 309.6 -0.6%

Operating income 89.3 76.4 16.9% 191.3 183.2 4.4%

Monthly ARPU (EUR) 25.5 28.1 -9.3% 25.5 28.4 -10.2%


Subscriber acquisition cost (SAC) 11.4 12.3 -7.3% 25.7 23.6 8.9%

Subscriber retention cost (SRC) 20.4 16.4 24.4% 39.1 34.8 12.4%

Churn (3 months) 3.4% 3.3% - 7.3% 7.3% -

Monthly MOU charged/ø subscriber 163.8 177.1 -7.5% 166.0 180.2 -7.9%


Subscribers ('000) 4,628.4 4,257.4 8.7%

Contract share 70.9% 67.5% -

Market share 42.3% 42.5% -

Market penetration 130.8% 119.8% -

Mobiltel, Bulgaria, in EUR million (unaudited) 2Q 09 2Q 08 % change 1H 09 1H 08 % change

Revenues 157.7 165.6 -4.8% 307.8 320.0 -3.8%

EBITDA 87.9 96.0 -8.4% 164.5 188.9 -12.9%


Monthly ARPU (EUR) 9.5 9.9 -4.0% 9.1 9.6 -5.2%



Subscribers ('000) 5,205.4 5,154.2 1.0%




* The reported operating income represents the contribution of the subsidiaries to the consolidated operating income of operations of the Telekom Austria Group including amortization of fair value adjustments resulting from past business combinations and therefore may deviate from the results of the single financial statements.



Velcom*, Belarus, in EUR million (unaudited) 2Q 09 2Q 08 % change 1H 09 1H 08 % change

Revenues 75.6 71.1 6.3% 148.4 135.6 9.4%

EBITDA 38.8 35.0 10.9% 75.5 66.9 12.9%

Operating income 20.8 16.9 23.1% 39.0 30.1 29.6%

Monthly ARPU (EUR) 6.4 6.9 -7.2% 6.3 6.7 -6.0%


Subscribers ('000) 3,817.4 3,369.0 13.3%



Vipnet*, Croatia, in EUR million (unaudited) 2Q 09 2Q 08 % change 1H 09 1H 08 % change

Revenues 119.3 128.2 -6.9% 224.7 244.7 -8.2%

EBITDA 40.6 49.4 -17.8% 73.2 91.6 -20.1%


Monthly ARPU (EUR) 12.3 14.9 -17.4% 12.2 14.7 -17.0%



Subscribers ('000) 2,609.0 2,272.2 14.8%




Si.mobil*, Slovenia, in EUR million (unaudited) 2Q 09 2Q 08 % change 1H 09 1H 08 % change

Revenues 42.4 46.4 -8.6% 88.1 90.5 -2.7%

EBITDA 11.4 15.5 -26.5% 21.7 30.2 -28.1%


Monthly ARPU (EUR) 21.2 23.6 -10.2% 21.5 23.5 -8.5%



Subscribers ('000) 581.8 534.7 8.8%




* The reported operating income represents the contribution of the subsidiaries to the consolidated operating income of operations of the Telekom Austria Group including amortization of fair value adjustments resulting from past business combinations and therefore may deviate from the results of the single financial statements.



Vip mobile, Republic of Serbia, in EUR million (unaudited) 2Q 09 2Q 08 % change

1H 09 1H 08 % change

Revenues 18.4 12.7 44.9% 33.8 24.8 36.3%

EBITDA -7.4 -9.6 -22.9% -14.2 -22.6 -37.2%

Operating income -22.8 -21.8 4.6% -44.2 -45.0 -1.8%

Monthly ARPU (EUR) 5.3 5.3 0.0% 5.0 5.5 -9.7%


Subscribers ('000) 1,067.5 666.6 60.1%



Vip operator, Republic of Macedonia, in EUR million (unaudited) 2Q 09 2Q 08 % change

1H 09

1H 08 % change

Revenues 5.2 2.5 108.0% 9.1 4.3 111.6%

EBITDA -4.0 -5.2 -23.1% -8.3 -11.2 -25.9%

Operating income -5.7 -6.1 -6.6% -11.7 -13.0 -10.0%

Monthly ARPU (EUR) 6.5 3.6 80.6% 5.6 3.4 64.7%


Subscribers ('000) 224.4 209.2 7.3%



mobilkom liechtenstein in EUR million (unaudited) 2Q 09 2Q 08 % change

1H 09 1H 08

% change

Revenues 4.6 5.7 -19.3% 10.2 10.3 -1.0%

EBITDA 1.0 0.8 25.0% 1.8 1.9 -5.3%

Operating income 0.8 0.6 33.3% 1.4 1.5 -6.7%


Subscribers ('000) 6.2 5.5 12.7%


Waiver of Review

This half-yearly financial report of the Telekom Austria Group has not been audited or reviewed.

Statement of all Legal Representatives

We confirm to the best of our knowledge that the condensed interim financial statements give a

true and fair view of the assets, liabilities, financial position and profit or loss of the group as

required by the International Financial Reporting Standards (IFRS) and that the group

management report gives a true and fair view of important events that have occurred during the

first six months of the financial year and their impact on the condensed interim financial

statements and of the principal risks and uncertainties for the remaining six months of the

financial year and of the major related party transactions to be disclosed.

Vienna, August 19, 2009

The Management Board

Hannes Ametsreiter, CEO Hans Tschuden, Deputy CEO, CFO


Documents

Results for the First Quarter 2003...Results for the First Half 2009 Fixed Net line loss cut by 2/3 in 1H 09 to 20,600 lines Double digit subscriber growth of 10.1% to 18.1 million